Witness blasts Colonies settlement
Joe Nelson, Staff Writer
Created: 07/30/2011 10:12:55 PM PDT

San Bernardino County doled out $102 million to a Rancho Cucamonga developer to settle a land-rights lawsuit based on inflated damage estimates by the developer with no documentation to justify the figures, according to Grand Jury witness testimony.

Former Interim County Counsel Dennis Wagner said the settlement amounted to a gift of public funds, according to recently released Grand Jury transcripts in an ongoing corruption scandal alleging the landmark settlement in November 2006 was tainted by blackmail and bribery.

“How do you settle a $102 million case without documents?” Wagner told prosecutor Lewis Cope during his testimony in April.

Wagner said the three board members who voted in favor of the settlement – Bill Postmus, Paul Biane and Gary Ovitt – relied solely on damage estimates produced by the developer, Colonies Partners LP, and took the developer’s word that the county could face damages of more than $300 million if it lost in court.

“Frankly, trying lawsuits, if I just believed the other side, what they told me, I’d be digging ditches now,” Wagner said.

Colonies Partners sued the county in March 2002, alleging the county abandoned its flood-control easements on the developer’s 434-acre development in Upland and refused to pay for flood-control improvements.

The county, however, maintained throughout the nearly five-year litigation that its easements were both valid and sufficient for the needed flood-control improvements, and that the developer was responsible for any improvements.

On May 9, the 19-member Grand Jury handed down a 29-count indictment against Colonies co-managing partner Jeff Burum; Biane, a former county supervisor; Ovitt’s former chief of staff Mark Kirk; and Jim Erwin, former union leader turned assistant assessor and the former chief of staff for Supervisor Neil Derry.

The four are charged with multiple felonies including conspiracy to commit a crime, bribery and conflict of interest. Burum is alleged to have conspired with the defendants to secure the settlement in Colonies’ favor in exchange for $400,000 in bribes and political favors.

All four have denied the charges.

In late March, Postmus pleaded guilty to all charges filed against him in the Colonies case and a separate criminal case in which he was accused of using the Assessor’s Office to coordinate political campaigns and bolster his political career.

Postmus was elected assessor in November 2006, and, as Board of Supervisors chairman, allegedly inflated the assessor’s budget in December 2006 by more than $1 million so he could hire cronies to assist him in his political ambitions once he entered the Assessor’s Office one month later.

Colonies calls the shots

In a news release issued the day of the settlement on Nov.28, 2006, Postmus acknowledged it was Colonies Partners that claimed the flood-control district’s liability could exceed $300million if the case ended up before a jury.

“The settlement is a win for county taxpayers,” Postmus said in the release. “If we had not settled this, the (flood control) district could have been responsible for triple the amount of this settlement, and that amount could have compromised the district’s ability to protect citizens from flooding.”

The Grand Jury testimony paints a different picture. It shows that attorneys defending the county felt Colonies’ damage estimates were inflated for the developer’s benefit and lacked merit.

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